IRD or Interest Rate Deferential is a formula the banks use to calculate mortgage penalty if you decide to break the mortgage with your current lender. The IRD formula is used in a case where the current posted rates are lower then your mortgage rate. This is done in order to have a bigger penalty if you are breaking your mortgage for a better rate.

There is no way out when it comes to paying the penalty for breaking the mortgage. The bank where you are transferring the mortgage may agree to assume the penalty. If you are not selling your home but want to get a new mortgage make sure that its worth it to you. If you have to pay a mortgage penalty it might not be worth it for you to switch. Most banks offer cancellation penalty calculator. RBC offers a pretty good one but you will need to know the following data; Original mortgage amount, interest rate, months left in the term contract. Once you enter these fields you will get an amount you need to pay to cancel the property. Its also displays two options one is for 3 month mortgage interest and the other one is IRD fee. You need to know what is the term used to define your penalty type. Most banks charge 3 month mortgage interest which could be about 1000$ per every 100,000 mortgage.